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NEW DELHI: An auditor of a raft of firms founded by Pawan Kumar Bansal's kin was nominated as a government director on the board of state-run Canara Bank in 2007 at a time the embattled railway minister was a junior minister in the finance ministry overseeing banking and financial services.

Documents accessed by ET show that firms controlled by Bansal's son Amit and his nephew Vijay Singla, who has been arrested by the Central Bureau of Investigation for allegedly accepting a bribe from a senior railway official, had dealings with the bank during the three year period that Sunil Gupta was the non-official part-time director — a post reserved for chartered accountants. Gupta subsequently became a 'shareholder director' and was appointed to the bank's audit committee in 2010, when his term as a government nominee came to an end.

Canara Bank had sanctioned a loan of around Rs 25 crore to Singla's Mirage Infra Ltd, according to the filings made by the company in March 2010 with the Registrar of Companies. The filings also reveal that Mirage has not taken loans from other banks and has a share capital of Rs 5 lakh. It had no significant business activity during the period. The company is currently involved in developing a real estate project in Chandigarh. No Role in Loans to Bansal Kin.

Amit Bansal's Theon Pharmaceuticals and ISIS Packaging have collectively taken loans amounting to more than Rs10 crore from the bank. Filings by Theon reveal that Canara Bank was its chief lender in financial year 2008, when the loan was taken by the firm. Similarly, filings made by ISIS Packaging reveal that Canara Bank was its only lender in financial year 2011.

Gupta denied Pawan Bansal had played a role in his appointment to Canara Bank's board or that there was any conflict of interest in being an auditor to Bansal family firms and a director of a bank that lent money to them.

"The banking division had sought applications for the post which were subsequently screened, and the decision was taken on merit. Pawan Bansal did not influence the decision," he said. As for the loans, Gupta said, the decisions were taken by the bank's local office and did not come to the board. Canara Bank also denied there was anything untoward, with its Chairman & Managing Director RK Dubey saying the bank had followed all due diligence while sanctioning the loan. "There is nothing wrong with the companies. We have not got any adverse reports," he said.

He added that Gupta's term on the bank board would end next month and that "as far as we are concerned, there is nothing amiss". Gupta also said the Amit Bansal company, on which he is a director, is a "defunct company" and therefore there is no impropriety.

While there is no suggestion of impropriety, these revelations could be seized upon by Bansal's critics as corroboration of his links with his nephew, while putting the spotlight on the businesses owned by his family and how they have fared since he became minister.

Amit Bansal told ET that some of the loans had been repaid. He promised to get back to this newspaper with more details, but subsequently did not take calls nor respond to SMSes. Ranjit Sinha, the head of the CBI, declined comment on the matter. Pawan Bansal did not respond to calls from ET.

Last week, the CBI arrested Singla on charges of accepting a bribe from senior railway official Mahesh Kumar in return for a plum posting on the railway board. The arrest of Singla and Kumar has come as a blow to the already beleaguered UPA government, which is facing flak from the Supreme Court for alleged interference in the investigation into coal block allotments. Opposition parties have been demanding the removal of the railway minister, but Congress has resisted these calls.